The price of fuel could drop to £1 per litre amid falling oil prices, as supermarkets head towards a potential petrol price war following Asda’s announcement to cut the price of unleaded by 2p per litre.
The retailer said it would be giving motorists a “weekend boost”, which will see its customers pay no more than 109.7p per litre across its 272 filling stations.
The move, which comes into immediate effect, means that in the last month Asda has cut the price of unleaded by 5p per litre and the price of diesel by 9p per litre.
RAC spokesman Rod Dennis said: “The reason we’ve been slower to see unleaded price cuts is because the wholesale price of petrol - the price retailers buy the fuel for - has not fallen at the same rate diesel has. Diesel has been on a steady downward path since the start of May, driven by increased capacity from Asia, but the same cannot be said for petrol.
“If the conditions stay right, we could see some even lower prices in a few weeks as people return to work after the summer and the school run begins again. And if Brent Crude were to move to the 40 US dollar per barrel mark, the prospect of some enterprising retailers selling fuel for £1 per litre will make a return.”
He added: “This latest price cut from Asda, coming just two weeks after the last, will be met with cheer from drivers of the country’s 19 million petrol cars, who will have noticed that diesel drivers have been enjoying substantially lower prices for over a month now.
“This summer has been a much cheaper one for motorists than the last. The cost of filling up an average family petrol car is now around £8 less than it was last summer, and around £12 less for a diesel car.
“Fuel is a major expense for millions of families in the UK, and these latest cuts are certainly helping to ease that burden.”
Andy Peake, Asda’s senior director for petrol, said: “We’re bringing some good news to unleaded motorists following a series of diesel price cuts.
“As we head towards the busiest bank holiday weekend of the year on our roads, this new drop means drivers across the country will pay no more than 109.7p per litre for unleaded and diesel remains at a market leading 106.7p per litre at our forecourts.”
Steve Gooding, director of the RAC Foundation, welcomed the news, adding that with oil trading at the same price as it was in January, more cuts could be expected.
He added: “Also the current retail margin on petrol is almost twice as much as the long term average which is another indicator that pump prices could fall further.
“However it is worth remembering that the biggest influence on what motorists pay at the forecourts is not the oil price but taxation.”
Soon after Asda’s announcement, Sainsbury’s said it would also be cutting the cost of unleaded by 2p per litre.
The reduced price will go live across the supermarket’s 300 forecourts on Saturday.
Morrisons will make the same cut to the price of its unleaded petrol, effective from 2pm.
It said that with the latest reduction, unleaded prices will be 15p a litre cheaper than 2014’s August Bank Holiday, making it £7.50 less to fill up a typical family car.
Jamie Winter, services director for Morrisons, said: “The current weakness in world markets is working in the favour of motorists because plummeting oil prices are combining with a strong pound to help us reduce petrol prices.”
Find the average fuel prices near you at petrolprices.com.